Soon after taking office last year, President Donald Trump issued a directive laying out his “maximum economic pressure” policy against Iran.
Yet Trump seems to have decided that even maximum pressure can be turned up to 11.
He calls his new plan “Economic D-Day,” and it is meant to break the stalemate in the U.S. conflict with Iran.
On Monday, Treasury Secretary Scott Bessent announced new sanctions against 60 Iranian and Iran-linked entities, individuals and vessels, and demanded the closing of all branches of a major Iranian bank that operates in many countries.
But his demands that other nations stop doing business with Iran underscore the difficulty in trying to impose sanctions on Iran’s economy to the point of collapse.
Thoroughly enforcing sanctions is notoriously hard, and in Iran’s case would require messy run-ins with allies and powerful rivals capable of retaliation, most notably China. Imposing a full ban on global trade with Iran, as Bessent called for, only multiplies those challenges. Bessent himself admitted doing so could roil the global economy.
Those factors help explain why U.S. officials are still struggling to strangle Iran’s economy despite the mountain of sanctions Washington has heaped on the country over the past five decades.
Since Iran’s 1979 Islamic Revolution, the United States has placed sanctions on thousands of specific Iranian officials, businesses, vessels and other entities — freezing any of their assets under U.S. jurisdiction and barring them from transactions with American banks, businesses or people.
The U.S. government has also broadly targeted most of Iran’s major industries, from oil to banking to textiles and manufacturing; one round of sanctions in 2020 hit two Tehran-based tile and ceramics companies. In his first term, Trump even formally designated Iran’s central bank and national oil company as financial backers of terrorism.
“We’ve done all the low-hanging, medium-hanging and high-hanging fruit,” said Alan Eyre, a former U.S. diplomat and Iran expert now with the Middle East Institute. “We’ve cut down the whole sanctions tree. There’s nothing left.”
All that provides reason for skepticism about Trump’s latest plan for coercing Iran through economic pain.
Iran’s economy took a toll as oil exports plunged.
Nearly 50 years of U.S. sanctions, dating to the Carter administration, have done little to change Iran’s behavior.
After anti-American revolutionaries overthrew a friendly Iranian government in 1979 and took dozens of American diplomats hostage in Tehran, President Jimmy Carter banned many Iranian imports and froze $12 billion in Iranian assets.
His successor, President Ronald Reagan, officially declared Tehran a state sponsor of terrorism, a move that prompted an arms sale ban and tightly limited the export of “dual use” items that might have a military function. (Reagan violated his own ban in a covert arms-for-hostages scheme that became the infamous Iran-Contra affair.) In 1987, all Iranian goods and services were prohibited from import into the United States.
By the mid-1990s, concern about Iran’s suspected interest in chemical, biological and, especially, nuclear weapons fueled more U.S. pressure against its economy. Congress passed a measure threatening sanctions against foreign companies that invested heavily in Iran’s petroleum industry, and President Bill Clinton ordered a near-total ban on all U.S. trade and investment.
Iran’s advancing nuclear program was a source of major alarm in Washington and Western Europe by the 2000s. In several actions from 2006 to 2010, the United Nations Security Council froze the assets of dozens of Iranian officials and entities connected to its nuclear program, barred arms exports to and from Iran, and prohibited Iran from testing ballistic missiles.
Congress took even more severe action in the following years, barring foreign transactions with Iran’s central bank and threatening to penalize other nations unless they reduced their imports of Iranian oil.
The pressure took a toll: Between 2012 and 2015, Iran’s oil exports plunged to 1 million barrels per day from 2.5 million, according to a Congressional Research Service report, and Iran was left without access to more than $120 billion in its assets held abroad.
Faced with that economic pain — and growing talk of U.S. or Israeli military action — Iran agreed in 2013 to begin negotiations over its nuclear program with the Obama administration and several other world powers.
The result was the 2015 Iran nuclear deal, which traded limits on Iran’s nuclear activity for the removal of many of the nuclear-related U.S. and U.N. sanctions imposed on the country over the prior two decades.
The nuclear deal did not touch numerous “primary” U.S. sanctions, tied to nonnuclear activity like human rights and terrorism, which bar most commercial activity between the United States and Iran and their respective citizens. But it opened the door for a major revival of Iran’s economy by removing U.S. “secondary” sanctions that punished third countries for doing business with Iran; foreign nations could again buy Iranian oil and invest in its energy sector without fear of reprisal from Washington.
The reprieve was short-lived. Trump withdrew from the nuclear deal in 2018 and immediately restored the nuclear-related sanctions lifted under the Obama-era agreement.
‘Maximum pressure means …’
Trump has bombarded the country with new sanctions. He targeted virtually the entire Iranian economy, expanding penalties to sectors like construction, mining, textiles and manufacturing. Even third-country businesses or individuals that transacted with dozens of major Iranian companies could be subject to U.S. sanctions.
Most significantly, in 2019 Trump sought to cut off Iran’s oil revenue entirely, announcing that any country that imported Iranian crude would be subject to severe U.S. penalties, potentially including loss of access to the U.S. financial system.
“Maximum pressure means maximum pressure,” an April 2019 State Department fact sheet declared.
But Iran has grown skilled at evading U.S. sanctions, including through the use of a so-called shadow fleet of tankers that ship its crude to foreign buyers.
Trump has never picked the sort of fights with nations like China and India that analysts say would be necessary to enforce such a policy. On Monday, Bessent said that no country would be exempt from the new approach.
But analysts like Eyre were skeptical. The new policy is unlikely to succeed, he said, “unless President Trump wants to make full Chinese compliance, for instance, the centerpiece of U.S. relations” with Beijing. “I don’t think that’s going to happen.”
Bessent acknowledged the problem. Asked why he was merely issuing vague warnings to Iran’s trading partners rather than taking immediate action against then, he said he hoped to avoid confrontation.
“Why would I want to blow up the global financial system?” he said.
This article originally appeared in The New York Times.
